Cross-chain communication is very much an open problem for the blockchain ecosystem, and hopefully, this process will eventually be a thing of the past. The same goes for swapping wETH back to ETH, which can be done by using Uniswap or MetaMask. The process for unwrapping is essentially the same as the process outlined above for wrapping ETH on both platforms. The only difference is that the values should be changed (from wETH to ETH). The transaction will then need to be confirmed from the user’s crypto wallet.

This is done to ensure that wETH remains pegged to the value of ETH at all times. WETH can also be acquired by swapping other tokens for it on a crypto exchange, such as SushiSwap or Uniswap. Wrapping Ether tokens involves sending ETH to a smart contract. Meanwhile, ETH is locked to ensure that the wETH is backed by a reserve.

When we talk about wrapped tokens, we mean currencies hosted in the ETH blockchain having the same price as their underlying assets. These underlying assets do not necessarily have to be on the ETH blockchain. Thus, wrapped tokens allow interoperability between them and other digital assets.

After you sign up for a Metamask account, you can fund it with fiat currency, cryptocurrency, or a debit/credit card. Next, connect your Metamask wallet to your OpenSea account. In order to do this, you must complete one transaction between your OpenSea and Metamask accounts. One of them is the upgrade of decentralized financial activities, https://cryptolisting.org/blog/how-do-you-journalize-a-bank-statement so the Ethereum Blockchain, being the greatest DeFi ecosystem, does more than just registering and validating transactions. You will see many Decentralized Applications (dApps) requiring their users to convert from ETH to WETH because of the interoperability. One example would be the ERC-721 format that gives us Non-Fungible Tokens (NFTs).

Wait, Are Wrapped Tokens Not Stablecoins?

It’s worth noting that the user will need to hold some ETH in their wallet to pay gas transaction fees. Wrapping involves sending Ethereum to a smart contract that provides WETH in return. Both parties lock a set amount of ETH in a smart contract that governs their wager on the blockchain. If the temperature in London exceeds 80 degrees on the agreed-upon date, the smart contract automatically executes, sending ETH to the winning party’s crypto wallet. Ethereum is often described as a distributed computing platform.

• The ultimate goal of wETH is to make an Ethereum ERC-20 complaint.
• It is possible to create synthetic tokens that track the price action of stocks.
• Currently, many projects leverage the Ethereum blockchain and the ERC-20 standard to issue the necessary tokens to operate their platforms.
• He has stated that since decisions about wrapped assets are centrally made, adding the risk of market consumption.
• This gives us flexibility and the possibility to interact with different solutions in the cryptocurrency market.
• Other examples of wrapped cryptocurrencies include wrapped BNB (wBNB) and wrapped Bitcoin (wBTC).

Enter the value of the ETH you want to convert, and click on Wrap ETH. Proceed by entering the number of ETH you want to convert to wrapped ETH. However, while Ethereum is getting closer to becoming more interoperable, it is still a long way off. So, for now, transforming it into wETH is what people need to make Ethereum work consistently with other blockchains.

A decentralized exchange (DEX) is a type of exchange that specializes in peer-to-peer transactions of cryptocurrencies and digital assets. Unlike centralized exchanges (CEXs), DEXs do not require a trusted third party, or intermediary, to facilitate the exchange of cryptoassets. If you use Ethereum, most tokens you trade and invest with are likely to use the ERC-20 token standard. Using this technical standard has become a popular option for Decentralized Applications, wallets, and projects as it offers practicality to most users. However, this fact has presented a problem for Ethereum’s native coin, Ether. Ethereum’s DeFi ecosystem is large, and using WETH provides more opportunities for staking and investing.

But despite their popularity, not all traders and members of the crypto community deeply understand what these coins can offer to them and what differences from common coins they have. CoinSpeaker has prepared this guide on Wrapped Ethereum (WETH) to answer these and other popular questions on the issue. As mentioned before, you can unwrap Ether manually by interacting with a smart contract.

Understanding Wrapped Ethereum

The only difference is that instead of Wrap buttons, you will encounter “Unwrap” buttons. In Metamask’s case, however, you would need to swap your wETH for ETH. The act of “wrapping”, also known as tokenizing, transforms ETH into an ERC-20 token. Bridging the gap between ERC-20 and ETH, wrapping turns ETH into wETH, a tradable version of Ethereum.

How does wrapped ETH stay the same price as ETH?

Developers have a lot of room for customization when creating these digital assets. So while ETH can be used to pay for gas fees on Ethereum, ETH can’t be used in every DApp. WETH (WETH) is a wrapped form of Ethereum which allowed ETH to be swap with other ERC-20 Tokens in decentralized exchange(DEX) like Uniswap. Users can swap WETH, be WETH Liquidity Providers to earn fees and boost their yield by up to 20x when staking CRO.

Best Platforms

You can always “unwrap” your WETH and convert it back into ETH by putting your minted WETH back into the smart contract that generated it. For instance, if someone wants to buy ETH from you or accepts ETH in a transaction, they may not accept WETH. However, you can unwrap WETH and convert it to ETH easily and with low fees. Wrapped Ethereum and Ethereum are two different kinds of Ethereum tokens.

About WETH

Let’s say that you are bullish about the future of exchange tokens, then you could purchase a synthetic token that tracks these coins. Although you would not create this synthetic token, you would simply be able to buy it from another project or protocol that offers it to users. WETH is an ERC-20 token on Ethereum pegged to the price of Ether (ETH).

ETH was developed before the ERC-20 standard was established

However, you could buy Bitcoin’s synthetic token on the Ethereum platform called Wrapped Bitcoin (wBTC) and use it on different DeFi protocols on Ethereum. Establishing such an ecosystem requires a connection between disparate blockchains by letting them communicate with each other flawlessly. And to establish that connection, blockchains must have a uniform standard.